Principal Financial

Principal Financial Insurance is 140 years young, offering innovation, very competitive rates and a nice selection of products; it’s a company to be considered. 

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9.1
Grand Score
8
User Score
9.1
Grand Score
8
User Score
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The Principal Financial Group, referred to as ‘the Principal,’ grew out a desire to help individuals, families and small businesses meet their financial goals. One area of activity is within the life insurance space, where it offers term insurance policies, as well as several forms of permanent (whole) life insurance. We will be reviewing its permanent policies. The company has received many accolades for its ethics, customer focus and excellence as a place of employment, all boding well for how customers can expect to be treated. The company has the requisite financial strength to be there when your beneficiaries need it, which must be a central consideration when selecting a whole life insurance provider.

Grandfolk Scoring
Cost 9/10
Ease of enrollment 7/10
Coverage 9/10
Waiting period 10/10
Customer support 8/10
Maximum coverage 10/10
Exclusions 8/10
Financial strength 9/10
Medical exam required 10/10
Cost
Monthly premium
Varies based on age and other factors
Ease of enrollment
Ways you can enroll
Online form or phone
Coverage
What types of insurance?
Universal, variable, indexed and guaranteed universal life policies
Waiting period
How soon is the policy in effect?
Faster than most due to accelerated underwriting, averaging 8 days
Customer support
Ease of access
Online form, or phone Mon-Fri 7:00 AM-7:00 PM CST
Maximum coverage
What is the maximum coverage available?
Varies for each policy type
Exclusions
What isn’t covered?
Suicide exclusion not specified
Financial strength
A.M. Best’s Financial Strength Rate (FSR)
A+ (Superior)
Medical exam required
Is a medical exam required?
Technically yes, but waived for 50-60% of those who qualify
Age Score:
10
50-65 Years
10
65-75 Years
9
75-85 Years
9
85-Above

The Principal communicates through a clean, intuitive website that gives you tools to go as deep as you like to find answers to whatever you need. As you age, this clarity becomes more and more valuable. Yet you are also given the choice of other means of communication, depending on what works best for you. Despite being a very large corporation, the company gives the impression of easy accessibility. In fact, for the past four years, it has ranked ‘among the best’ in company-client interaction in a survey done by J.D. Power Ratings of Life Insurance Customer Satisfaction. One small downside is that the company uses ‘nearest age’ in its evaluations. For example, at 69 1/2 plus one day, you would be considered already 70. You could unknowingly ‘age out’ of an opportunity if you are approaching a maximum age for issue.

Health Score:
10
Great Health
10
Good Health
9
Fair Health
8
Poor Health

If you qualify, you may be part of the 50-60 percent of applicants who benefit from not having to take exams or lab tests during underwriting, part of the Principal’s Accelerated Underwriting. The company is not particularly strict on its underwriting guidelines; it is perceived as fair. Of course, once you have a policy, your declining health will have no impact on any rating or premiums going forward, unless you allow your policy to lapse and must start a new application process. As your health declines, if you need to access some of the funds accumulated in your permanent life insurance policy, you can withdraw or borrow against it. Most policies have the Chronic Illness Death Benefit Advance rider as well, to help with medical and other costs. Anything taken out, however, will be deducted from the value eventually paid to your beneficiaries. 

Pros:

  • Policies are issued faster and more efficiently through the Principal Accelerated Underwriting, with no lab testing or exams required for the 50-60 percent of applicants who qualify.
  • Average approval time to issue a policy is 8 days, but underwriting decisions can be received in as little as 48 hours.
  • The Principal rewards its clients for favorable health decisions with its ‘Healthy Lifestyle Credits.’
  • The Principal’s website is clean and intuitive, with a logical layering of information, including a ‘Life Insurance 101’ step-by-step guide to take the mystery out of life insurance basics.
  • Its website includes a quick calculator to determine your insurance need and to get an estimated insurance quote. 
  • The company ranks 11th in J.D. Power 2017 U.S. Life Insurance Study Customer Satisfaction for Individual Life (785 out of 1000), ranking ‘about average’ on billing, price and policy offering, but ‘among the best’ on how customers rate their interaction with the company.
  • Principal’s life insurance companies drew significantly fewer than the median number of complaints to state regulators in 2015 for a company of its size, per the latest National Association of Insurance Commissioners data.

Cons:

  • The company uses ‘nearest age’ in evaluations, which can be a problem if you are nearing a maximum age for issue, for example.
  • The Principal only offers quick online quotes for illustrative purposes. Formal quotes require contacting a licensed agent directly. While this is inconvenient for anyone who is rate shopping, this requirement is standard in the permanent life insurance world.

Bottom Line:

The Principal Financial Group is a leading financial services organization that offers life insurances among its many products. Its permanent life insurance selection is broad, with unusual products such as ‘second-to-die’ Survivor Universal Life which covers two lives, with a death benefit payable upon the death of the second life. The Principal’s prices are not rock-bottom, but they are indeed competitive. Between its solid financial strength which ensures the company will be there when you need it and its customer-centric attitude, the Principal is a company to consider if you decide permanent life insurance has a role to play in your financial planning. 

Frequently Asked Questions:

Does your whole life coverage include some kind of ‘accelerated death benefit?’ Yes, accelerated benefits are available on UL Protector IV and VUL Income III policies. Also, both Terminal Illness Death Benefit Advance and Chronic Illness Death Benefit Advance are available on UL Provider Edge, UL Flex III, UL Accumulation II, IUL Flex II and IUL Accumulation (see policy descriptions below). 

When does my coverage begin? Coverage begins only when the company approves your application for insurance and the premium is paid which, with the Principal’s Accelerated Underwriting, averages just eight days.

What one thing sets this insurer apart from others? The Principal applies unique automated accelerated underwriting on its permanent life insurance coverage, giving you a faster decision than most. Also, it offers a ‘second-to-die’ program called the Survivorship Program that allows two people to have coverage at a lesser cost.

More Information:

Product Details 

Overview: The Principal offers four major types of permanent life insurance. The universal and variable universal options both allow you to get a fixed death benefit, with flexible premiums, but the cash accumulation portion is invested differently in each case. (With a variable product, you have the potential for more significant growth by utilizing stock, bonds or mutual funds, but at the cost of higher risk.) Indexed universaland guaranteed universal policies offer other features that could be attractive.

Package Details: 

Universal Life Insurance – These policies accumulate cash value at a floating interest rate, with a minimum rate guarantee. They offer flexible death benefits and flexible premiums. They all provide the Chronic Illness Death Benefit Advance rider, and you benefit from Healthy Lifestyle Credits.

Universal Life Provider Edge – A low-cost permanent plan for coverage to age 90 and greater, issue age to 85, minimum face amount of $50,000, but offers amounts of $1 million and greater. Good for estate planning, survivor income and exit planning.

  • Universal Life Flex III –Flexible coverage with attractive cash value in years 15-30, with a high degree of premium and death benefit flexibility. Minimum face amount of $50,000, up to $1 million and greater. Good for estate planning and income replacement.
  • Universal Life Accumulation II –Long-term growth and income, with a fixed interest rate. Issue to age 85, minimum face value of $50,000. Good for supplemental retirement income.

Variable Universal Life Insurance – Accumulation-focused products designed to provide death benefit protection and supplemental income. The risk is higher, but you have more control over the allocation of your premium dollars. It provides flexibility with a more aggressive cash value accumulation strategy and gives you options to access tax-deferred cash values without penalty. 

  • Variable Universal Life Income III – Long-term, market-based cash value growth and efficient income distribution for high-income earners with moderate-to-high risk tolerance. A wide range of investment options, with death benefit guarantee to age 65, 85 or 100. Issue age to 85, minimum face value of $100,000, good for those maxing out their 401(k) plans or who don’t qualify for a Roth IRA.

Indexed Universal Life – for those interested in the potential for higher interest earnings than traditional universal life insurance offers. Both types are available for issue to age 85.

  • Indexed Universal Life Flex II – Flexible coverage with attractive cash in years 15-30. Minimum face value of $100,000.
  • Indexed Universal Life Accumulation – For long-term growth and income. Minimum face value of $50,000. Good for personal retirement planning

Guaranteed Universal Life – Both offer Death Benefit Guarantee, but no Chronic Illness Death Benefit Advance rider.  Can be used in estate planning to leverage certain tax deductions.

  • Survivorship Universal Life Protector II – Guaranteed death benefit for two insureds at affordable rates, issue ages 20-85 for the youngest person, up to 90 for the oldest, for coverage that cannot be outlived (guaranteed coverage to age 100 or greater). Covers two lives, with a death benefit payable upon the death of the second life. Minimum face amount of $250,000. Good for estate planning and exit planning.
  • Universal Life Protector IV – Lifetime guaranteed benefit at affordable rates, issue ages to 85, minimum face amount of $50,000, can go to $1 million or greater. Good for estate planning, survivor income and exit planning. 

Optional Accessories or Add-on Services: The Principal’s available add-ons, or riders, to some permanent life policies include Chronic Illness and Terminal Illness Death Benefit Advance, Cost of Living Increase, Life Paid-Up and Waiver of Monthly Policy Charge. 

Additional Company Details

Contract Details: View individual policies for details. 

Warranty: N/A 

Accreditations: The Principal Financial Group has been accredited by the Better Business Bureau since 1948 and holds a rating of A+ on BBB’s website. It carries A.M. Best’s high rating of A+ for financial strength and has a Comdex ranking of 91 out of 100 (average rating from the four major rating agencies). It enjoys many kudos, such as being named one of the World’s 100 Most Ethical Companies per Ethisphere Institute for six years running, and one of America’s Best Employers by Forbes in 2016.  

Company Details: The Principal began as Bankers Life Association in 1879 when founded by Edward Temple and five others to offer life insurance in the form of memberships to its initial clients: healthy men aged 22-55 who worked in low-risk occupations. Since then, it has changed its name (to Principal Financial Group in 1985), gone global, and gone public on the NYSE in 2001. By 2016, it ranked 236th on the Fortune 500 list of companies by revenue. By 2017, premiums and fees from individual life insurance alone reached nearly $1.1 billion.

As CEO Dan Houston says, “Simply put, your goals are at the heart of what we do. It’s what motivated Edward Temple to start our company in 1879. It’s what continues to drive us today. We believe everyone can make progress with the right partner.” The Principal’s life insurance policies are issued by Principal National Life Insurance Company and the Principal Life Insurance Company. Securities are offered through Principal Securities, Inc.

Contact: 

Principal Financial Group
711 High Street
Des Moines, IA 50392

Phone: 800-986-3343

Website: https://www.principal.com 

Sharon O'Day - Senior Advisor

Sharon O’Day fixes financial lives. She is a tell-it-like-it-is money expert with a successful career in global finance, plus an MBA from the Wharton School. Today she specializes in getting entrepreneurial women over 50 back on their game so they can have more money, less stress and more joy. With her “Over Fifty and Financially Free” strategies, they take actions that lead to their ultimate goal: financial peace of mind.